We at KResearch view that turnover in the Thai retail market may report a sharp contraction during 1H20 due to a number of factors. These include risk stemming from the COVID-19 outbreak, which is expected to persist during 1H20, and continuing weakness seen in domestic purchasing power resulting from economic factors, rising unemployment and drought. In addition, the Thai retail market will likely be threatened by a substantial drop in the number of international tourist arrivals and sluggish spending at home, in particular on fashion merchandises, furniture and home decorating items. However, spending on consumer products (dried food and personal care products), surgical masks and hand sanitizers is increasing as they are necessities amid fears of the virus, though their prices have been driven by hoarding.
Nevertheless, the retail market may gradually pick up in 2H20 if the COVID-19 outbreak can be contained during 1H20 and there are government measures to bolster purchasing power while retailers introduce promotional campaigns, with focus on the best value for money, at an appropriate timing. Moreover, effective health and safety measures must be put in place to combat the virus and enhance confidence of consumers to use services at retail stores.
Given this, KResearch projects that turnover in the Thai retail business will contract 0.8 percent YoY in 2020. However, if the COVID-19 epidemic is prolonged or becomes much worse, the turnover may shrink 2.2 percent YoY, which would be equivalent to THB150-200 billion in losses (as Thai and foreign tourists are reluctant to spend). Although the government may introduce measures to boost spending, they might be useful to a certain extent because consumers are still concerned about the virus and more cautious towards their spending.